Councilman admits taking $2.3 million bribe

November 5, 2013

Marcelo CoIn a case stemming from what is believed to be the largest bribe ever accepted by a public official in an undercover operation, a former member of the Moreno Valley City Council has agreed to plead guilty to a federal bribery charge for taking a $2.36 million cash payment from an undercover operative posing as a real estate broker, according to a press release.

Marcelo Co, 64, was charged this morning with one bribery count and one count of filing a false corporate tax return. Co agreed to plead guilty to the two charges that could send him to federal prison for as long as 13 years.

“Mr. Co orchestrated an elaborate and brazen scheme to undermine the democratic process in Moreno Valley,” said United States Attorney André Birotte Jr. “Whether he was motivated by power or greed, these crimes constitute a wholesale violation of his oath to work for the citizens who elected him.”

Co, who was elected to the City Council in November 2010 and resigned from his seat in August after being charged in state court in an unrelated welfare fraud case, is expected to make his initial court appearance in the federal bribery case early next month.

“Mr. Co regularly traded votes, land and confidential information in exchange for cash to fund his personal bank account, rather than what was in the best interest of the residents of Moreno Valley,” said Bill Lewis, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “This case was a result of seamless collaboration by the Inland Regional Corruption Task Force, whose members share a mission of rooting out corruption across the Inland Empire.”

The court documents filed this morning outline a bribery scheme in which Co told a businessman and an undercover FBI operative posing as a real estate broker that he would control a voting majority of the Moreno Valley City Council and would be able to guarantee land use decisions that would benefit the businessman and the land broker. Co also promised to always vote in favor of land use decisions that would benefit the real estate broker.

Co solicited campaign donations from the businessman, who was cooperating with the investigation, and the FBI undercover operative. Co eventually received payments of $5,000 and $10,000 that he said were to be used to finance the campaigns of individuals who would vote with him on land use issues.

In the fall of 2012, Co met with the undercover operative to discuss a multimillion dollar sale of a 30-acre parcel that he owned. Co told the real estate broker that once he had control of the City Council, he could change the zoning of the property and the land value would dramatically increase. With the City Council election in November 2012, Co told the undercover investigator that he had the votes to alter the zoning and increase the value of Co’s 30-acre parcel, which had been appraised at $710,000. Co proposed that the undercover operative purchase the property for $5.36 million, which would include a cash payment of $2.36 million.

At a meeting on January 30, 2013, Co agreed to sell the property for $5.36 million, but that the publicly filed documents would reflect a sale price of only $3 million. At this meeting, Co accepted $2.36 million in cash.

The tax charge that was filed today concerns a United States Corporation Income Tax Return (Form 1120) that Co filed for his company, Qwik Pack Systems, for tax year 2010. In that filing with the IRS, Co failed to report well over $100,000 in income. This tax charge is not related to the bribery scheme.

“Mr. Co’s intentional omission of more than $112,000 in taxable income – and failure to pay $31,000 in tax to the IRS – was committed for his own private gain and was an insult to honest taxpayers and the citizens of Moreno Valley,” said Joel P. Garland, Acting Special Agent in Charge for IRS – Criminal Investigation, Los Angeles Field Office. “Today’s action is an example of IRS-CI’s vigilance when it comes to enforcing tax laws, particularly when it involves our public officials. IRS-CI, in partnership with our law enforcement partners, is committed to bringing to justice public officials who use their political office to commit crimes.”

At Co’s initial appearance in federal court, which is expected to be in early December, the case will be assigned to a District Judge who will schedule a hearing for Co to formally enter the guilty pleas.


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“Today’s action is an example of IRS-CI’s vigilance when it comes to enforcing tax laws, particularly when it involves our public officials. IRS-CI, in partnership with our law enforcement partners, is committed to bringing to justice public officials who use their political office to commit crimes.”


Now that there is pressure for the cities to accommodate SMART GROWTH, being first to lubricate the process has become a boom for the graft industry, the alternative to protecting property rights.

hmmmm….not sure that I can equate SMART GROWTH principles with graft and losing private property rights. It’s a zoning issue, and as a libertarian hearted as I am, there are components of SMART GROWTH I believe are necessary.

For starters: Given our current economic model, fractional reserve banking and the USD pegged to oil, which makes our currency numero uno by far, GROWTH has to occur. I don’t like it but its everyone’s reality. Oil, oil, oil.

Now I believe that the principles of SMART GROWTH is to keep the growth at an urban core, utilizing mass transit, and minimizing our dependence on oil and cars. I believe its also a necessary and important component in socialization of citizens. Currently, the track of surburban sprawl is keeping us dependent on autos and isolating citizens.

Yes I can agree on the merits of SMART GROWTH but I do not like the politics nor the examples I have visited. Take Chicago for example, there you have the utopia for all the perks you have addressed. No Thanks!

…you mean the Chicago where the felon Dan Rostenkowski the former chairman of the House Ways & Means committee came from? Where current POTUS Barack Obama sat and listened to sermons of the racist Jeremiah Wright?

Nah…that’s not my utopia, but I just don’t think we should throw the baby out with the bath water…

All I’m saying is SMART GROWTH is a policy tool to manage how we want growth to occur, which will occur. City councils and BOS can cherry pick the components of the entire package that’s suitable for their constituents.

Corruption is color blind.

some of my best friends are from Chicago !

This has nothing to do with Smart Growth. Moreno Valley has had previous issues, as well as Riverside County and San Bernardino County. The real issue is the amount of money to be made by any type of development and corrupt politicians.

I would say the “Smart Growth” track record for corrupting political and academic institutions is rather lengthy, going all the way back to the Model Cities program of LBJ – the poster child of which was Detroit. Enough said.

Not quite enough…peel that onion back some more and look at the history of New York City. Ric Burns documentary is worth a looksee…7 DVD’s a war and peace epic going back to the dutch traders.

Not sure if you remember the old Penn Station, but it was an architectural jewel and mass transit hub only to be demolished and replaced by Madison Square Garden.

I believe we need to focus long standing capital development on fundamental social principles and not for immediate limited financial benefit of a few, which is the case of Penn Station.

I would say that Academia is working from ideals trying to counterbalance what developers like Robert Moses, et al has done to this country. Taking advantage of the “American Dream” of home ownership and developing an unsustainable culture dependent on oil.

Can’t wait to hear what Kelly Gearhart and Jay Miller may have to say.